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NEWS RELEASE
CENTRINITY REPORTS PRELIMINARY THIRD QUARTER FINANCIAL RESULTS FOR FISCAL 2002
Expenses down, cash continues better than expected and further cost reduction actions will assure strong cash position
TORONTO, CANADA - JULY 23, 2002 - Centrinity Inc. (TSX: CTI), the developer of the FirstClass Communications Platform, today announced that its revenue for the third quarter ended June 30, 2002 will be approximately $4.1 million, which is similar to the comparable quarter in Fiscal 2001. Revenue is expected to be approximately $13.2 million for the nine months ended June 30, 2002 representing 4% growth over the same period last fiscal year. All figures are unaudited and are in Canadian dollars
Revenue in the third quarter from enterprise customers is expected to be approximately $3.9 million, representing growth of 11% as compared to the same quarter of Fiscal 2001 ($3.5 million) and is down 5% as compared to the second quarter of this fiscal year ($4.1 million). The Company's focus on its FirstClass Communications Platform for enterprise customers, particularly education and government, continues to provide growth in line with the Company's plan. Revenue from service providers is expected to be approximately $0.2 million for the quarter, as compared to $0.6 million for the same quarter last year and Q2 of Fiscal 2002. The decline in revenue reflects the continued slowdown in the telecom sector and the delays in securing new service provider contracts.
The Company expects a third quarter loss of approximately $3.3 million ($0.14 per share) as compared to a loss of $17.2 million ($0.72 per share) in the same quarter of Fiscal 2001. The net loss for the second quarter of Fiscal 2002 was $2.9 million ($0.12 per share). Normalizing for foreign exchange gains and losses, the loss in the third quarter is approximately the same as the loss in the second quarter of this fiscal year due to lower expenses.
Cash on hand as of June 30, 2002 was $14.3 million. The net cash outflow for the quarter was $1.6 million or approximately $0.5 million per month as compared to a net cash outflow of $0.7 million per month during the first six months of this fiscal year.
In the second quarter the Company revised its full year outlook to reflect the continued slowdown in the telecom sector. Consistent with this revision, actions are being taken to ensure costs are aligned with near-term revenues. Accordingly, the Company expects to take a charge of $1.0 to $1.5 million in the fourth quarter to reflect the cost of these actions, which includes a workforce reduction of approximately 15% since June 30, 2002. Details of the cost reductions will be disclosed in mid-August when Centrinity announces its final results for the third quarter.
By the close of the fourth quarter the Company also expects to have successfully subleased over 80% of the space it vacated in Fiscal 2001. This will result in a net cash inflow on existing lease commitments of approximately $1.0 million in Fiscal 2003.
"The market has clearly slowed in one of the areas that we had targeted for growth and consequently we must focus on those opportunities that will generate near-term revenues," said Jane Mowat, executive vice president and chief financial officer. "The expense actions and sublease of excess space will position Centrinity to capitalize on these opportunities while ensuring there is adequate cash for contingency."
"Centrinity is pleased that its messaging offerings continue to provide revenue growth from enterprise customers, in spite of a difficult economy," said John Myers, executive vice president and chief operating officer. "The cost reduction actions we are taking will more closely align our costs with our revenues and ensure that our focus is sharpened on the best market opportunities. Our new FirstClass 7.0 release announced on July 15, delivers many new capabilities that should help us increase revenue and market share. The release includes an Exchange Migrator and Connector tool. Further details can be found on Centrinity's website."
Third Quarter Teleconference Call
Jane Mowat, executive vice president and chief financial officer, John Myers, executive vice president and chief operating officer and Bruce Horton, vice president of finance and administration will host a teleconference call in mid-August to comment on the Company's third quarter financial results. The date and time will be publicized one week prior and will be posted on the Company's web site at www.Centrinity.com in the "investors" category.
About FirstClass Communications Platform
FirstClass is a software messaging platform that combines Centrinity's award-winning Collaborative Groupware and Unified Communications technologies into one Common Communications Platform. At the foundation of the FirstClass Communications Platform is Centrinity's Collaborative Groupware, which provides users with the ability to effectively communicate and share valuable resources through email, conferencing, directories, calendaring and online chats.
Centrinity's FirstClass Unified Communications technology, seamlessly converges email, voice mail and fax messages into one unified mailbox thereby enabling users to access all of their data and messages via the device of their choice including cell phone, telephone, computer and handheld devices - anytime, anywhere.
About Centrinity Inc.
Centrinity is a leading provider of cost-effective, highly scalable, feature-rich messaging and collaboration solutions to service providers, enterprises, governments, and learning organizations. Our award-winning software solutions are designed to enhance productivity and efficiency by simplifying and facilitating communications and information-sharing for both individuals and groups of people working together. Centrinity is listed under the symbol 'CTI' on the Toronto Stock Exchange. Website: www.centrinity.com.
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For more information, please contact:
Margaret Williamson
Manager, Corporate Communications
Centrinity Inc.
Tel: 905.762.6234
This news release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. The company cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what the company currently foresees.
FirstClass is a registered trademark of a Centrinity Inc. subsidiary used under license. Centrinity and the Centrinity logo are trademarks of Centrinity Inc. All other trademarks are the property of their respective owners.
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